Queensland's deficit higher and growth lower than predicted

A higher than predicted deficit and lower growth rate - things aren't as rosy for the Queensland economy as the government had hoped.

Treasurer Tim Nicholls delivered the mid-year fiscal and economic update on Thursday and admitted the deficit would be $571 million higher than the 2014-15 budget estimate, bringing it to $2.842 billion.

Queensland Treasurer Tim Nicholls' mid-year fiscal and economic update has painted a grimmer than expected picture for the state.

Photo: Glenn Hunt

Mr Nicholls said part of that increase was due to the federal government paying disaster relief funding during 2013-14, a year earlier than expected.

But as with the 2014-15 budget, these were not the numbers Mr Nicholls wanted to be delivering just months out from the next election, which may explain why it took 10 paragraphs in the government media release before any of the bad news was acknowledged.

Unemployment, currently the highest in mainland Australia, continues to plague the government and it seems unlikely it will reach its "stretch target" of 4 per cent by 2018, with unemployment for this financial year up a quarter to 6.15 per cent from the budget estimate. It was sitting at 5.5 per cent when the LNP took government.

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"We work every day to get jobs for Queenslanders," Mr Nicholls said.

"That is why we are doing what we are doing. Importantly, because of our strong financial management, we don't have to increase taxes, put increased burdens on businesses, so they can, go out and employ more people.

"...We are working every day to provide opportunities for people to employ Queenslanders here."

The promised surplus, estimated to be $331 million, is still in place but growth predictions, estimated at 5.75 per cent in the next financial year, are lower than expected.

Mr Nicholls said it was still the "strongest growth in the nation".

The following financial year, the surplus is more tenuous, currently predicted at $216 million.

Taking into account the state's resource exports increasing, moving into 2018 the surplus is predicted to reach $634 million.

Expenditure was down $720 million from the budget estimate at $49.213 billion.

But so was revenue - the government received $971 million less than it was expecting, "reflecting modest 5.2 per cent growth".

"As a result of some changes to payroll taxes (they) are slightly softer than we anticipated. We saw an increase in stamp duty as a result of property transactions, but the increase in the stamp duty on property transactions is not enough to off-set some of the slowing down in payroll taxes."

The government is counting on LNG exports ramping up in 2015-16 to improve revenue into the forward estimates.

All in all it leaves the government with not a lot of good news to take to voters in a few months time, outside of the lines it has been repeating for months and a promise that things will get better.

But the answer, Mr Nicholls said, as always, was the government's 'strong choices' plan.

In fact the plan is so strong, it needed to use the word three times in the one sentence.

"Only the Newman LNP Government has a strong team with a strong plan to build a stronger Queensland," Mr Nicholls said in his release.

But in the meantime, Mr Nicholls said Queenslanders could rest assured that the government, which will face voters with a soft economy and the nation's highest unemployment rate, "that we are getting things better now".

"We have taken a budget that was bathed in red ink. We are now turning it around," he said.

"We will have for the first time in a decade a fiscal surplus in 2015-16. We have demonstrated our ability to control the growth and expenses and we are delivering more and better services and have been doing so.

"Eight-hundred-and-fifty extra police on the beat provides better security for Queenslanders. More hospitals being, providing better services, elimination of the dental long list wait. All of those are achievements that have been undertaken by this government, that are not going to be achieved by the former government.

"With unemployment continuing to be a target for this government, working every day to reduce the number of Queenslanders who don't have a job, every day we get up to focus on that target of 4 per cent unemployment rate over six years, nothing has changed."